llinois has a $95 billion unfunded pension liability crisis, but it's a problem that can be solved, according to the director of the Center for Tax and Budget Accountability.

Ralph Martire spoke to a small group of Western Illinois University employees and others during a talk Tuesday at the Tri States Public Radio performance studio. The talk was sponsored by the WIU chapter of University Professionals of Illinois.

Martire said a flawed tax policy and the irresponsible fiscal practice of borrowing against the state's five pension systems to subsidize the cost of delivering services are at the root of the state's unfunded pension crisis, as well as its overall $8.14 billion budget deficit. He also said the unfunded pension problem wasn't caused by pension benefits, even though a number of current pension reform bills in the Illinois General Assembly address changes to benefits.

According to Martire, the state's unfunded pension liability was $8.7 billion in 1989 and ballooned to $17 billion by 1994. When the markets crashed in 2008, the liability grew to more than $45 billion. Today, the state's five pension systems are just 40 percent funded.

The nine states with the highest graduated income tax rate structures — Illinois isn't among them — all show better growth in Gross State Product, increases in median wage and identical unemployment rates, than the nine states which have no income tax.

"We can't fix the problem without fixing revenue," Martire said.

Following Martire's presentation, John Miller, president of WIU's UPI chapter, said his organization has been "pushing" Martire's solution for years.

He said the UPI is particularly concerned about retirement security being cut for its members and all state employees.

"That has a long-term economic impact on the region as a whole," he said. "Small businesses start to suffer. That's concern number one. Concern number two, and they're equally important, is the cuts to higher education. What happens when we cut higher ed one more time? We've been cutting higher ed for years, and it hasn't solved anything."

Martire said Illinois' funding of education ranks 50 out of 50 states in the portion of education covered by the state.

Regional Office of Education #26 Superintendent John Meixner said he supports the ideas touted by Martire and the CTBA and calls it "the most reasonable, rational approach to the solutions to the problem."

He also agrees it's the state's over-reliance on property taxes to fund schools.

"The education world has known that for decades," he said. "The problem is it's now worse than ever because the state is diminishing their revenue to the schools even more, so it increases the burden on the taxing bodies."

Meixner said when school districts see continuous declines in state revenue and local taxpayers have been pushed to brink, there's only one thing left to do:

Page 2 of 2 - "They cut," he said. "There's cuts. There's staff cuts, program cuts. That's the next thing you're going to start seeing in two years. You're seeing staff cuts now. School districts are in staff cutting mode right now. The next line is program cuts. Fine arts, vocational, athletics — those are the things that will be next. Transportation is getting hammered. These are serious, damaging issues to education."

Martire said he has reason to believe state legislators are ready to listen to what he has to say, given that the state's fiscal situation is so dire. He believes the state's legislative leaders are paying attention.

"It's just going to get worse if they don't resolve the problem ..." he said. "And then there's been some leadership that we haven't had before. Senate President Cullerton has gone on the record saying he supports a graduated income tax rate.

So there's hope and there's some strong leadership support which we've never had before. And I think once this gubernatorial election is behind us in 2014, there's real chance the tax policy stuff could move. I think we could fix the pension stuff right here right now, if we could just get enough folks to understand it's really the debt that's driving our problems and not the pensions."